Powerchip Semiconductor: Taiwanese Company Scripts A Remarkable Turnaround Story By Recasting Itself As A Pure Play Foundry

Capping a remarkable corporate turnaround story, the shares of Taiwanese contract chipmaker Powerchip Semiconductor Manufacturing Corp soared by more than 50 percent on Monday (Dec 6) as it debuted at the Taiwan Stock Exchange.

In its earlier avatar, Powership was the biggest memory chip maker of Taiwan but the company had to delist in 2012 as it was drowned in $4 billion debt crisis driven by heavy losses in a DRAM cyclical downturn in 2012. It was forced to close down its most advanced chip plant and sell off the assets to US-based Micron Technology Inc. It also gave up the stakes it owned in a joint venture with Japan's Elpida Memory, then its most important tech partner.

The struggling company under the leadership of Dr. Frank Huang effected a change of strategy as it moved away from heavily commoditized memory chips and recast itself as operating pure play foundry player that produces driver ICs for flat panels, imaging processors and power management chips. This helped the company stage a remarkable recovery and a turnaround.

Powerchip Semiconductor is now among the four key contract chipmakers in Taiwan. It specializes in mature technologies and owns two 8-inch wafer fabs with a monthly capacity of 110,000 units and three 12-inch wafer plants with a monthly capacity of 110,000 units.

The other three contract chipmakers are Taiwan Semiconductor Manufacturing Co — the world’s largest chip behemoth with a share of more than 50 percent of the global market — United Microelectronics Corp and Vanguard International Semiconductor Corp. TSMC, UMC and Powerchip account for 62% of global market

Powership Semiconductor is now the sixth-largest contract chipmaker in the world and aims to be the fifth-largest very soon.

Driven by global chip shortage that has triggered unprecedented demand for peripheral chips that Powerchip Semiconductor specialises in, the company clocked US$2.12 billion in consolidated sales for the first 11 months, up 40.76 percent year-on-year.

Companies like Powership are set to benefit by the new wave of investment in global semiconductor industry.

On March this year, Powerchip held a groundbreaking ceremony for a $10 billion, 12-inch fab in Taiwan's Tongluo Science Park. The total capacity of 100,000 wafers per month will be put into production in stages beginning 2023

Semiconductor manufacturers worldwide will commence construction on 19 new high-volume fabs by the end of this year and break ground on another 10 in 2022 , according to a quarterly World Fab Forecast report by SEMI, an industry association comprising companies involved in the electronics design and manufacturing supply chain.

The new wave of chip foundry investment is driven by the accelerating demand for chips across a wide range of markets including communications, computing, healthcare, online services and automotive.

A global shortage of semiconductor microchips is causing havoc, delaying car production and affecting operations at some of the largest consumer electronics manufacturers.